We’ll start again with oil, where if you held that May delivery contract, you couldn’t even pay to give it away! Storage is so tight that fears over where you’d put the oil if you were the holder of the contract at expiry meant the price actually turned steeply negative for a brief period in last night’s trading. The move isn’t reflective of the wider market, where though prices are depressed there is hope that A, not all storage will be utilised for the June delivery B, Opec+ producers will turn the taps off sooner and C, some parts of the world might actually start moving in the next few weeks and demand could increase (albeit that increase would be from ‘non-existent’ to ‘anaemic at best’). To the second point; Saudi and other Opec members are considering starting their production cuts earlier than the May 1st date they’d previously agreed. The agreed cuts only equate to 10 million barrels per day, so even if they acted now instead of May 1st they’d barely be taking a day’s worth of consumption out of the market. The US producers are being forced to shut in wells as fast as they can, despite Trump saying that the government will buy oil as a tactical move to increase stockpiles and reduce global dependency. The problem with this is that even the US’s largest storage depot, Cushing, only has capacity for about 85 million barrels. Trump is also considering halting Saudi imports.

To the point of getting things moving; In Italy, that’s become political with not only a north-south divide, but a left-right one too. The north-south divide comes as regions in the North feel that they’ve got things under enough control to want to get back to work, providing strict controls are implemented – one problem to those controls is the plan to ‘self-certify’ your compliance and therefore is open to abuse – whereas the South fear that any opening risks another wave. Milan’s mayor has warned that to re-open his City too soon and without a comprehensive plan would be completely irresponsible – though this is exactly what the governor of the region wants to do. The IMF say that Italy’s economy will take a 9% hit from all of this and that wasn’t exactly sat on the strongest of foundations in the first place. Italy is also a keen exporter and wants to get back to production in the North and get goods on the water ASAP.

The big European event this week is the virtual EU leaders summit on Thursday and ahead of that plenty of people are making their thoughts on bailout funds known. The FT has an interview with Spain’s deputy PM for the economy, Nadia Calvino, who wants to see a 1.5 trillion Euro fund approved to evenly rebuild the blocs economies. Ms Calvino warns that if funds aren’t evenly distributed then economies that can afford to rebuild and get back to work quicker will end up undercutting those other economies that can’t and will exacerbate the already ‘two-speed’ problem that Europe finds itself in. Her plan would see the 1.5 trillion start to be disbursed in January and it be front-loaded so the bulk of the cash is readily available. Spain’s looking at a fall in GDP of around 13% by their own forecasts, which would take their debt pile up from 100% of GDP to 115% of GDP without them having raised any more money. Their access to markets is still good and they can raise on competitive terms, however they argue that EU support in the country is already falling and failure to act on such an accord would only exacerbate the problem.

In the UK, the government has been conflicted about advising us to wear masks to halt the spread of the virus. This conflict may not be because of the science, but because a rush on masks in the UK might leave the NHS in short supply. The NHS supplies of PPE remain patchy and health chiefs have warned government that such a move would put them under even more pressure. The UK’s active cases went above Italy’s yesterday for the first time at 108.9k versus Italy’s 108.3k, with Italy’s numbers showing their first fall since the outbreak. This puts the UK second only to the US, but the chasm between the two countries is wide, with the US at 672k active cases.

We saw Rishi Sunak unveil some more support yesterday, this time for start-ups; providing the start up has received at least £250k of funding over the last five years, the government will go in pound-for-pound alongside other investors with convertible loans that would mean the government getting equity if those loans aren’t repaid. The move has been widely welcomed, though the £250k threshold is actually pretty high for certain seed companies that have found enough of their own cashflow not to need to raise as much to continue their growth, but still not show any profit.
The PAYE furlough application website is now open and will have received more than 200,000 applications by this morning. That’s about 10% of the total number of firms registered on the PAYE scheme, so we expect that number to continue to rise apace.

UK retail results are coming out and one to watch is ‘Associated British Foods’ The company would be expected to be doing well through its core business stream, but it also owns Primark, which has had all of its stores closed and has zero online presence to soften the blow. Primark had been in the press for cutting payments to its suppliers, but has made a U-turn on that move and resumed making payments to them. Other news to watch for includes UK unemployment and jobless claim numbers (obviously going to be huge) and also the German ZEW confidence survey – expected to be well down, but any light from this could provide a bit of relief to markets that have opened lower this morning.

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